As the debate around what tax reform looks like heightens, the Mortgage Bankers Association is jumping in on the conversation, saying that they support the opportunity for comprehensive tax reform.
In a letter sent to Congress and the administration, MBA President and CEO David Stevens said, “On behalf of the Mortgage Bankers Association, I wish to express our support for the efforts you are leading to enact comprehensive tax reform.”
“We firmly believe that Congress and the administration have a ‘once-in-a-generation’ opportunity to overhaul the tax code in a manner that will spur long-term economic growth, create jobs, and place more money in the pockets of hard-working Americans,” he said. “We believe these potential changes should be viewed holistically, and look forward to supporting you as a resource in your ongoing efforts.”
The letter comes shortly after President Donald Trump announced his new tax plan, which would double the standard deduction and eliminate state and local tax deductions. However, despite the announcement, the details around the plans are still sparse.
What is known is that the administration has clearly stated that they want homeownership to be a priority going forward.
Jim Tobin, National Association of Home Builders chief lobbyist and head of government affairs, previously noted this in an interview, saying, “Starting back with the release of the Republican blueprint about a year and a half ago, it’s been clear to us that tax policy is changing.”
Similar to the MBA, NAHB came out earlier this month saying that after 75 years, they are open to changing the mortgage interest tax deduction.
“Now is the time to reform tax policy, and housing will not be left behind in this process,” said Granger MacDonald, NAHB chairman and a builder and developer from Kerrville, Texas.
While both organizations are open to talks about housing tax reform, what that looks like for each one is different.
The MBA’s letter said that they are “specifically pleased that the recently-released ‘Framework for Fixing our Broken Tax Code’ (preserves current key incentives for investing in real estate, including the mortgage interest deduction and the Low-Income Housing Tax Credit.”
For the MID, the MBA added, “We were pleased that the Framework proposes to maintain the MID, though in combination with the near doubling of the standard deduction for individuals and households – a move that (while limiting the number of itemizers writ large, and in combination with lower overall rates) would provide renters and homeowners alike with additional ‘take home’ pay.”
Beyond the MID, the MBA said that the proposed changes also provide policymakers with a tangible opportunity to pursue alternative homeownership tax incentives. And in doing so, the incentives could target more efficiently to low- to moderate-income borrowers.
The letter also stated that the MBA continues to support current tax law that allows homeowners to exclude a portion of the gains on the sale of a home.
Even though it was not mentioned in the Framework, the MBA said it “believe this provision increases velocity within the residential marketplace by suitably incentivizing the ‘move-up’ middle class homebuyer.”
On the other side, there were parts of the Framework that the MBA disagreed with.
“The possibility of limiting or eliminating other critical provisions of the tax code, such as the continued deductibility of business interest and the preservation of Section 1031 like-kind exchanges (“Section 1031”) for investment real estate, has raised significant concerns within our membership,” the MBA letter stated.
“In an effort to maximize the program’s effectiveness, MBA believes that statutory changes should be made as part of the reform effort to expand the amount of LIHTC credits available and offset the impact of proposed lower tax rates on the valuation of the underlying credits themselves,” the letter added.
Overall, the MBA said they are interested in offering their perspective as talks of reform increase. “We are pleased that Congress and the administration are tackling this historic opportunity to fix the U.S. tax code,” said Stevens. “We stand ready to work with you and your respective staffs to ensure that Americans, whether they own or rent, continue to have access to affordable and sustainable housing.”
The letter was sent to Senate Majority Leader Mitch McConnell, R-Ky., House Speaker Paul Ryan, R-Wis., Treasury Secretary Steven Mnuchin, Senate Finance Committee Chairman Orrin Hatch, R-Nev., National Economic Council Director Gary Cohn and House Ways and Means Committee Chairman Kevin Brady, R-Texas.